In this blog post, we will explore the key server monitoring metrics, explain their significance and provide best practices for leveraging these metrics to enhance your server management strategy. We will also highlight how Kaseya VSA, a powerful remote monitoring and management (RMM) solution, can help you monitor these server metrics, driving efficiency and ensuring security.

What are server monitoring metrics?

Server monitoring metrics are quantitative measures used to assess the performance, health and efficiency of servers. These metrics provide insights into various aspects of server operations, enabling IT professionals to detect and resolve issues proactively. Monitoring server metrics is essential in the cybersecurity landscape as it helps identify potential threats, optimize resource utilization and ensure that servers operate within acceptable performance parameters.

What are key server monitoring metrics?

Understanding the key server monitoring metrics is vital for maintaining optimal server performance. Here, we discuss the most critical metrics that every IT professional should monitor:

CPU utilization

CPU utilization measures the percentage of CPU capacity currently in use. High CPU utilization can indicate that the server is under heavy load, which may lead to performance issues or server crashes. Monitoring CPU utilization helps balance the load and plan for capacity upgrades.

Memory usage

Memory usage tracks the amount of RAM being used by applications and processes on the server. High memory usage can slow down server performance and cause applications to crash. Monitoring memory usage allows IT teams to identify memory leaks and optimize memory allocation.

Disk usage

Disk usage measures the amount of disk space being used. It is crucial to monitor disk usage to prevent storage from becoming a bottleneck. Running out of disk space can lead to application failures and data loss. Regular monitoring helps manage storage efficiently and plan for expansions.

Network traffic

Network traffic monitors the data sent and received by the server over the network. High network traffic can indicate potential issues, such as bandwidth saturation or distributed denial-of-service (DDoS) attacks. Monitoring network traffic helps in identifying unusual patterns and ensuring that the network bandwidth is sufficient for server operations.

Server response time

Server response time measures how quickly the server responds to requests. Slow response times can affect user experience and indicate underlying performance issues. Monitoring response time helps identify bottlenecks and optimize server performance.

Uptime and downtime

Uptime refers to the amount of time the server is operational, while downtime is the period when the server is unavailable. Monitoring uptime and downtime is crucial for maintaining service level agreements (SLAs) and ensuring business continuity. High uptime is a key indicator of reliable server performance.

Error rates

Error rates track the number of errors occurring in server operations. High error rates can indicate software bugs, configuration issues or hardware failures. Monitoring error rates helps in quickly identifying and resolving issues to maintain smooth server operations.

Server load

Server load measures the amount of work being handled by the server, including CPU, memory and disk usage combined. A high server load can lead to performance degradation. Monitoring server load helps in balancing the workload and planning for resource upgrades.

Security metrics

Security metrics include monitoring for failed login attempts, unauthorized access and malware detection. These metrics are essential for maintaining server security and protecting sensitive data from cyberthreats.

Application performance

Application performance metrics track the performance of applications running on the server. Monitoring these metrics helps in identifying issues specific to applications and ensuring they run efficiently.

Why is monitoring network traffic important for servers?

Monitoring network traffic is crucial for various reasons. It helps in identifying unusual traffic patterns that may indicate security breaches, such as DDoS attacks or data exfiltration attempts. By monitoring network traffic, IT professionals can also ensure that the server has adequate bandwidth to handle data transfers and can identify and resolve network congestion issues. Additionally, network traffic analysis helps optimize network performance and improve the overall user experience.

How is uptime calculated in server monitoring?

Uptime is calculated as the percentage of time the server is operational over a specific period. The formula for calculating uptime is:

For example, if a server was operational for 720 hours in a month and experienced 2 hours of downtime, the uptime would be:

High uptime is a critical metric for ensuring reliable server performance and maintaining SLAs.

What are the benefits of monitoring server metrics?

Monitoring server metrics offers various benefits, including:

• Proactive issue resolution: Monitoring server metrics enables IT teams to identify and resolve issues before they escalate into major problems. By addressing potential issues proactively, organizations can minimize downtime and ensure smooth operations.
• Optimized performance: Regularly monitoring server metrics helps in optimizing server performance. IT professionals can identify bottlenecks and make necessary adjustments to enhance the efficiency of server operations.
• Resource planning: Monitoring server metrics provides insights into resource utilization. This information is valuable for planning capacity upgrades and ensuring that servers have adequate resources to handle the workload.
• Enhanced security: Server metrics help identify potential threats and vulnerabilities. By monitoring these metrics, organizations can implement necessary security measures to protect servers from cyberattacks and unauthorized access.

Why is regular server monitoring necessary?

Regular server monitoring is essential for maintaining server health and performance. It helps detect issues early, optimize resource utilization and ensure that servers operate within acceptable performance parameters. Regular monitoring also helps maintain compliance with regulatory requirements and industry standards.

What security metrics should be monitored on servers?

Monitoring security metrics is crucial for protecting servers from cyberthreats. Here are some key security metrics that should be monitored:

Failed login attempts

Monitoring failed login attempts helps identify potential brute-force attacks. A high number of failed attempts can indicate unauthorized access attempts.

Unauthorized access

Tracking unauthorized access attempts helps identify security breaches. Monitoring access logs is essential to ensuring that only authorized personnel have access to the server.

Malware detection

Monitoring for malware helps identify and mitigate malware infections. Regular scans and monitoring can prevent malware from compromising server security.

Security patch status

Monitoring the status of security patches ensures that servers are up to date with the latest security updates. This helps in protecting servers from known vulnerabilities.

Firewall logs

Analyzing firewall logs helps identify potential security threats and unusual traffic patterns. Regular monitoring of firewall logs is essential for maintaining server security.

How can Kaseya VSA enhance your server monitoring and management?

Kaseya VSA is a comprehensive RMM solution designed to maximize your IT team’s efficiency, streamline operations and enhance service delivery across your IT landscape. It provides IT professionals with an extensive toolkit to ensure servers operate at peak performance, maintain security and minimize downtime. Here are some robust features of Kaseya VSA:

• Automated monitoring and alerts: Kaseya VSA automatically monitors critical server metrics such as CPU utilization, memory usage, disk space and network traffic. It provides real-time alerts for any anomalies or potential issues, allowing IT teams to address problems before they impact performance.
• Centralized dashboard: With Kaseya VSA, IT professionals can access a centralized dashboard that provides a comprehensive view of all monitored servers. This single-pane-of-glass view makes it easier to manage multiple servers, track performance metrics and identify issues quickly.
• Remote server management: Kaseya VSA offers robust remote management capabilities, enabling IT teams to manage and troubleshoot servers from anywhere. This feature is particularly beneficial for organizations with distributed IT environments, allowing them to maintain control over their servers without the need for on-site presence.
• Patch management: Keeping servers up to date with the latest security patches is crucial for maintaining security. Kaseya VSA automates the patch management process, ensuring that servers receive timely updates and are protected against known vulnerabilities.
• Detailed reporting and analytics: Kaseya VSA provides detailed reporting and analytics on server performance metrics. IT professionals can generate custom reports to analyze trends, identify performance bottlenecks and make informed decisions about resource allocation.

Kaseya VSA empowers IT professionals with the tools they need to effectively monitor, manage and secure their servers. To explore firsthand how Kaseya VSA can benefit your organization, get a 14-day free trial now.

Understanding and monitoring key server metrics helps proactively identify and resolve issues, optimize resource utilization and protect servers from cyberthreats. Kaseya VSA offers a comprehensive solution for server monitoring, providing IT professionals with the tools they need to manage server performance effectively. To explore the robust capabilities of the solution and learn more about network monitoring and visualization, download this Kaseya VSA product brief.

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Unfortunately, Managed Services Providers (MSPs) have always struggled with marketing. In fact, sales/marketing is one of the top four concerns of MSPs, according to Datto’s most recent Global State of the MSP Report. But by understanding a few main ideas, you can develop an effective content marketing strategy.

Content marketing is one of the best ways to generate leads. While many MSPs are satisfied with the leads they’re generating through word-of-mouth referrals, they’re leaving money on the table by not having a content marketing strategy. Putting together a content marketing plan isn’t rocket science. (Believe it or not, it’s a lot easier than handling a Cyber Incident for one of your clients.)

Simply put, your content marketing strategy is a framework of how you plan on creating and delivering content to your targeted audience. One of the key components of a content marketing strategy is your goals. What do you hope to achieve? Would you like to increase traffic to your website? Generate more leads? Your content marketing plan should also include a mix of content and delivery channels. For example, blogs are particularly useful tools MSPs can capitalize on. Finally, be sure to consider your messaging and build it into your overall strategy.

But even though content is king, you need to have the right strategy.

Why isn’t my content marketing strategy delivering?

Now, if your content marketing strategy isn’t delivering, you probably didn’t consider any of the above points. For instance, are you creating content for your targeted audience? If you’re developing blog posts for techs while trying to target C-suite executives, you’re wasting your time. You’re targeting the wrong audience! Always research your content topics ahead of time to ensure they’re of interest to your target market.

If your content marketing goals aren’t aligned with your business goals, you may have difficulty calculating your return on investment (ROI). Is your goal to generate more leads or increase brand awareness? Each target should have a key performance indicator (KPI) assigned to it to help determine if you’re making headway with your efforts.

MSPs also have a hard time with developing their own messaging. If you’re using content from a vendor, add your voice and spin it — that’s another way to set yourself apart from your competitors. In other words, add your personality to the content.

Finally, don’t be discouraged if you’re not generating leads immediately. If you’re starting from zero, it’s going to take some time. It could take up to several months before you see a return on your efforts — but that’s okay. You took the first step of developing a content marketing strategy, and you’re following it through. Giving up is a sure way to pour money down the drain.

There’s no “silver bullet” to developing an effective content marketing plan. What works for your competitors may not work for you. Ensure your content marketing strategy delivers by following the above guidelines.

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Non-technical executives have long, and unjustly, considered IT as a call center function. However, we (in the IT industry) of course know that IT is in fact a strategic business function. This gap between perceived value and actual value stems from IT historically not setting or tracking many key performance indicators (KPIs).

The post Top 20 IT KPIs and Metrics You Must Track Today appeared first on Kaseya.

A help desk comprises of a group of skilled technicians using help desk software to troubleshoot IT problems. It allows technicians to track tickets from multiple channels quickly and efficiently and maintain business continuity and high productivity. According to Future Market Insight, the global help desk software market was valued at around $9.9 billion in 2021 and is estimated to reach to reach a valuation of nearly $26.8 billion by the end of 2032.

An IT help desks prevent users from wasting productive time searching for simple solutions that an expert can provide in a minute.

What are help desk metrics?

A poorly managed help desk will not only disrupt business but also become a costly affair. Did you know that 89% of consumers will switch to a competitor following a poor experience? IT technicians use several metrics to track help desk performance and ensure that it remains productive, efficient and operates at its best capacity. IT technicians and executives can use these metrics to identify help desk features performing well and those that need improvement.

The metrics also provide insights into whether a help desk is on track to meet its key performance indicators (KPIs). Metrics drive KPIs. To illustrate this with an example, let’s look at the ticket resolution rate and average response time. With these metrics, the help desk can see if its KPI to increase customer satisfaction is being met.

In this blog, we’ll look at all the crucial help desk metrics, understand their importance and explain how to leverage them to boost business growth.

10 help desk metrics to measure

A help desk is the backbone of any organization. However, those selling technology solutions need a top-notch one. The success and growth of their business will eventually depend on how quickly and seamlessly their help desk resolves customer queries. The efficiency with which a help desk operates directly impacts user experience and can determine employee and client retention.

As with any business department, help desks must meet performance requirements. They have to ensure that users who raise a ticket or an IT query get the resolution in the fastest time. By tracking help desk metrics, technicians can ensure their engagement with users meets expectations.

Companies can analyze several metrics to determine performance. In this section, we’ll look at the top 10 metrics that all help desks should track to assess the efficiency and quality of their service and improve their customer service experience.

1. Ticket volume: Ticket volume refers to the number of incoming service requests or support tickets generated by the user. Tracking this metric will give you insights into how many tickets your team can resolve in a day, week, month and year. It will ensure that you maximize output without overworking the team.
2. Tickets by channel: Help desks can receive requests from multiple channels such as emails, web forms, live chat, social media, phone, etc. Technicians can train staff in the popular channels and determine where to station the most staff and what type of training to provide. These steps will lead to an efficient help desk.
3. First response time (FRT): It’s the time an agent takes to respond to a ticket as soon as it is submitted. FRT can be calculated in minutes, hours and even days. A quick first response rate positively impact customer loyalty and satisfaction. About 90% of customers rate an “immediate” response as important or very important when they have a customer service question. The goal of an efficient help desk is to reduce the FRT rate, which goes on to improve the customer experience.The formula for calculating average FTR is:
   FRT = Total FRTs during that particular minute or hour / total number of resolved tickets
4. Average response time: This is the average time an agent takes to respond to a query within a defined timeframe. The FRT metric calculates how long it takes an agent to respond to a ticket, whereas average response time calculates how long it takes each agent to respond to a ticket within a specific timeframe. This metric can be used to identify peak productivity hours.The formula to calculate this metric is:
   Average response time = Total time taken to respond during the selected time period / the number of responses in the selected time period.
5. Ticket resolution rate: An IT help desk agent’s performance and quality of work can be determined using this metric. It compares the number of tickets an agent solves within a timeframe with the number of tickets assigned to them. A high ticket resolution rate reflects well on the customer service team. It means that the team is resolving tickets promptly and is on track to meet KPIs.Ticket resolution rate = No. of number of tickets solved by an agent / the number of tickets assigned x 100
6. First contact resolution rate (FCRR): The FCRR is the percentage of help desk queries resolved during the first interaction with the customer. As such, the greater the FCRR, the better the customer experience. Therefore, it is imperative to continually track and improve your FCRR to enhance customer satisfaction and build a stronger brand image.
7. Average resolution time: The average resolution time is an effective measure of how long it takes to resolve a user query. According to a report by CMO Council, a fast response time is the most important element of the digital customer experience. Evaluating the average resolution time helps you analyze whether you are providing your customers with the level of service promised and helps identify any potential opportunities to ensure faster and most effective service delivery.
8. Agent utilization: Agent utilization is the ratio of work produced by IT help desk technicians against their work capacity. An agent who puts in six hours of work in an eight-hour shift is working at a utilization capacity of 6/8 X 100 = 75%. Agent utilization is the best way to measure labor productivity. Keeping a tab on this data can help lower help desk costs while increasing output.
9. Agent performance: Agent performance measures how each help desk agent is performing on each of the help desk metrics. Through this, we can identify agents who perform well and those who do poorly. This data can be used to identify best practices and design training material for new or underperforming agents.
10. Customer satisfaction score (CSAT): Customer satisfaction scores are the simplest way to determine how happy or unhappy a customer is with your service. At the end of an interaction, customers are often asked to rate their satisfaction on a scale. It could be a 1 – 3 or 1 – 10 scale. To determine the score, all the positive responses are divided by the total number of responses collected and divided by 100%. Based on this percentage, you can determine whether customer satisfaction is at an all-time high level or if there is room for improvement. According to Hubspot’s Annual State of Service Report 2022, CSAT remains the most important KPI for almost 75% of customer service leaders.

Why are help desk metrics important?

The IT help desk plays a key role in managing an enterprise’s IT systems and infrastructure. It is the primary touchpoint for every IT issue, problem and request. Measuring and benchmarking key IT help desk metrics is essential for CIOs and IT operations leaders looking to improve business alignment and value, end-user productivity and reduce the total cost of IT support.

Now that you understand that a help desk is a vital part of any business, let’s discuss some of its benefits.

Capacity planning

Amazon is an undisputed leader in its field due to its excellent customer service. To achieve sustained growth and build brand loyalty, companies must provide top-notch customer service consistently. By tracking help desk metrics, business leaders can take the correct call regarding whether they have the resources to scale their business up or not. In a nutshell, capacity planning and customer service go hand in hand since an overburdened help desk will result in more errors and a lower customer retention rate.

Resource optimization

Help desk optimization lowers costs, increases productivity and improves output quality, which leads to higher customer satisfaction. Metrics such as agent performance and agent utilization will help you decide whether to hire more help desk agents or whether to maximize the utilization of your current staff.

Increase transparency

Measuring metrics allows for accurate estimation of a help desk’s performance. It fosters accountability and keeps stakeholders updated on how things are going. When clear systems and processes are in place, problems get resolved quickly, and the people responsible for solving them understand what needs to be done.

Uncover challenges

By looking for patterns and trends in the metrics data, technicians can spot common issues and take steps to fix them. Regularly performing this step helps ensure that the process runs smoothly and that problems are caught early on.

Identify opportunities

Metrics guide help desk managers to change and update their strategy as and when needed. By guiding technicians to prioritize critical tasks over noncritical tasks, it keeps the help desk on track to meet SLA requirements.

How can I improve my help desk efficiency?

Implementing an effective and efficient help desk is a major challenge that most growing businesses face today. Here’s a list of best practices that you must keep in mind to ensure your team makes the most of your help desk to minimize business disruptions, drive efficiency and enhance customer experience.

Create a knowledge base and self-service portal

A library or knowledge base that stores comprehensive information on IT issues and ways to troubleshoot them is an invaluable resource for businesses. An IT help desk management software helps curate this knowledge repository, thus helping IT teams resolve similar issues quicker in the future. Additionally, your end users can directly troubleshoot their common IT issues with help from the knowledge base. This will lead to lower ticket volumes in the long run.

Establish consistent reporting

The solution should feature a dashboard that offers real-time information on the progress and status of tickets, allow you to easily generate custom reports and help you gain insights to make the right business decisions quickly and confidently.

Solicit customer feedback

Although deploying a help desk solution involves additional investment, these costs are offset by the high return on investment through higher team efficiency, greater productivity, enhanced product quality and greater customer satisfaction. An IT help desk also helps get real-time feedback on service and product issues, thus eliminating the costs associated with conducting post-release surveys.

Integrate and automate

A robust help desk software will allow you to automate common, low-value help desk workflows and processes and free up time for your technicians so they can focus on more critical issues at hand. It should also provide seamless integration with RMM and IT documentation tools and enable technicians to easily remote into an endpoint from the ticket window to troubleshoot the issue. According to Kaseya’s 2022 MSP Global Benchmark Survey, a whopping 96% of MSP respondents said they believe integrating core applications like RMM, PSA and IT documentation is important to their business.

Improve your help desk performance with Kaseya

Kaseya BMS is a professional services automation (PSA) tool that provides help desk capabilities designed to help you spend less time tracking tickets and more time serving your customers. It will allow you to crush IT tickets in record time by enabling you to upgrade your helpdesk functionality.

It enables you to better track tickets until customer issues are resolved and capture more billable revenue through improved billing per contract. The outcome: improved customer service and greater profitability. BMS works seamlessly with Kaseya VSA, our endpoint management and network monitoring solution, and IT Glue for knowledge and configuration management.

Run your help desk and IT operations confidently and efficiently with BMS. Request a free demo today!

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Increasing your website’s visibility should be one of your top priorities when it comes to driving higher lead conversions. Any online business thrives on quality traffic and the majority of businesses wish they could drive more traffic to their websites. In that regards, Google Analytics is an incredibly effective tool that can boost your online presence if you know how to leverage it. 

It can be overwhelming once you’ve installed the Google Analytics tracking code on your website because there are so many different metrics you can use to analyze and enhance your website’s Search Engine Optimization (SEO) or paid search campaigns. However, you are not required to examine each and every data point.

It is crucial to your success that you know how to navigate Google Analytics’ complex platform and get beyond the basic vanity metric reports. Concentrate on the metrics and insights that deliver actionable business insights and aid you in identifying the right growth opportunities. 

Here are the top three ways MSPs can use Google Analytics to improve sales and marketing outcomes: 

1. Start with the basics to track organic activities on your website

When you start using Google Analytics to study your website, the amount of data that affects your MSP website’s visibility may astound you. Conversion rate, bounce rate, user return rate and the overall ratio of new versus returning visitors are some of the things you need to look at to map the organic activities on your website. Then you may decide which of them are the most crucial and useful for your company.

Your MSP website’s page views are one of the most crucial pieces of information you should be aware of. With Google Analytics, you can discover significantly more about your page views than you ever could previously.

The analytic tool will provide you with real-time data on how many visitors visited a specific page, where they came from and how long they stayed on the page. After reading your page, you can also observe where the user went next. In general, this will give you a fair idea of how well the website was received by visitors.

2. What metrics matter most? 

It is essential to keep a close watch on which source channels bring in the most and least traffic to your site. This will help you make informed decisions about where to direct your efforts to achieve the greatest return on investment (ROI) from your marketing tactics and budget. Here are four metrics to check on a regular basis: 

Social Traffic

The Google Analytics Social Media report compiles all of your social traffic statistics into a unified, easy-to-understand dashboard, allowing you to evaluate how your social media content and paid initiatives affect visitor growth and conversions. You can assess: 

• Your current bounce rate
• Traffic across channels
• What pages your audience is looking at
• Which social channels attract the most monthly visitors

All of this data can assist you and your marketing team in determining which channels to prioritize, which require further attention and which may require paid advertising to attract more visitors. This should ensure that your audience continues to grow.

Mobile Conversion Rate

People today are increasingly utilizing their mobile devices over desktops to conduct research or make purchases. That’s why understanding how mobile customers engage with your website is critical. A terrible mobile experience can reduce a customer’s likelihood of engaging with a company by 52%.

If your conversion rate is substantially higher on desktop, it might mean your mobile experience needs some work. Enhancing the mobile view of your site will help you boost the user experience for mobile users.

Visitor Behavioral Flow

Regardless of how good your content is, most of your website visitors will not convert right away. They will most likely take their time and look over your website to see what you have to offer first. To enhance the possibility of conversion, you need to analyze user journeys from the Google Analytics Behavioral Flow and make them seamless.

Using this data, you can assist users in navigating your website by including call-to-action (CTA) buttons in your content to urge them to take the next step. You can also track where visitors leave your site and improve those pages to boost engagement and conversions.

Goal Reporting

The metrics that really matter to your business and marketing plan are sales – or impressions, or unique page views. Using Google Analytics to create goals allows you to keep track of your conversions and figure out which marketing channels are the most effective.

A goal might be anything from product purchases to email signups to any other action you wish to track. You can find out which channels are providing the best return on investment, which ones aren’t and which ones have room for improvement.

3. Evaluate the quality of your website

Finally, one of the most useful features of Google Analytics is that it may provide you with an assessment of your website’s general quality. All websites are graded on a number of parameters, including content quality, frequency of updates and refreshes, and other elements. Your website will appear lower in the search engine results pages for your keywords if it does not have an exceptional rating.

You can figure out what is working and what needs to be improved with your website based on the information you receive from Google Analytics.

3 Mistakes to avoid while using Google Analytics

There are several common blunders that prohibit MSPs from gathering reliable data on Google Analytics, appropriately understanding data and making effective changes based on that data. 

#Not using Google Analytics: The biggest error you can make with Google Analytics is not using it to its full potential. Even if you have the tracking code installed on your website, you may not be using the platform correctly if you aren’t logging in on a regular basis to check for changes in website data.

It isn’t necessary to log in every day, especially since you’ll want to look for long-term trends rather than short-term data fluctuations, but you should check in at least once a week to see what’s changed and what hasn’t, especially if you’re in the middle of a big campaign.

#Relying on a single report: Logging in and merely checking only a specific section of the platform is a mistake. Updating, expanding and reviewing reports on a regular basis gives a fuller picture. 

#Not filtering out internal traffic: By default, Google Analytics tracks all traffic to your site, including visitors from your own internal team. If you have a team that visits your site on a frequent basis through numerous channels, you may be reporting false data based on those visits.

Set up filters to prohibit internal visitors to screen them out. You can also use filters to exclude data sources from your metrics that you don’t want to include. This can be extremely useful in assuring the accuracy of your data.

While using Google Analytics isn’t a magic potion that can boost your conversions overnight, it is an important tool that helps MSPs develop a solid digital marketing strategy in the long term. It helps you generate high-value traffic that has the potential to lead to more new and recurring engagements. 

Ready to gain access to 2,000+ sales and marketing assets that you can use to drive traffic to your website? Ask your NCA Rep or Account Manager about signing up for Powered Services Pro today!

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To become profitable, MSPs need to understand what drives their business and what doesn’t. And to do so, they must measure a few important metrics that when analyzed can help the MSPs achieve their business goals. 

8 Important Metrics Every MSP Must Monitor

1. Monthly Recurring Revenue (MRR) 

As the title states, this is the monthly revenue that when measured continuously, can forecast future revenue patterns that can act as a starting point of your expansion plans. 

With the help of MRR, you can predict financial security based on which you can take decisions that can help you scale exponentially. 

MRR = Average revenue per account × Total number of accounts. 

2. Profits 

Measure the profits of individual customers rather than overall profit. This way you can recognize which services/customers benefit you and which do not. Create a baseline with the data analyzed and price your services accordingly to keep your business floating. 

Profit = Revenue – Cost of goods/services sold (COGS) 

3. Overhead

This is the sum of all the operating costs whether fixed or variable which will provide you an insight into how much revenue you need to bring in to cover your costs and to not lose your money. This includes billable staff and non-billable items like – rent of your office, utility, training, cleaning, fuel, etc. 

Overhead = Fixed costs + Variable costs 

4. Utilization

To effectively track utilization of a resource, you need to track the real-time hours committed against a contract. Track individual utilization to ensure that every resource is accountable to their goals. 

Utilization Rate = Hours worked on customer/Total hours worked 

5. Earning before interest, taxes, depreciation and amortization (EBIDTA)

This is one of the most important metrics to measure the efficiency and profitability of a MSP business.  EBIDTA is measured to evaluate the worth of a business. It is mostly used to compare companies against each other and industry averages. However, Investopedia notes that EBITDA’s calculation can vary from one company to next, hence it shouldn’t be used as a one-size-fits-all, stand-alone tool for evaluating corporate profitability. 

EBIDTA = Net profit+ Interest + Taxes + Depreciation + Amortization 

6. Customer Lifetime Value (CLV)

This is the total worth of your customer over the entire period of the relationship. As the cost of acquiring a new customer is definitely more than retaining an existing customer, for a growing company, it is necessary to increase the CLV of its customers to become profitable. You can increase your CLV by switching the billing cycle from monthly to annually or by providing added value with better and higher-priced service bundles.  

Meeting your customer’s requirements and keeping them happy is the key to increasing CLV. 

CLV = Revenue from the customer – The cost of acquisition 

7. Product Margin 

For an MSP business, product margin is similar to profit margin, the difference between the cost at which the product/service is provided and the actual cost of the service. The greater the difference, the higher is the margin. A good profit margin varies based on the industry. However, generally, a 10 percent net profit margin is considered “average”, whereas 20 percent is considered “good” and less than 5 percent would be “low”. 

As per Investopedia, Gross profit margin = (Net sales – Cost of goods sold)/Net sales

8. Managed Services Agreement Profitability

The profitability of your managed services contracts is one of the most important metrics you must track. It involves measuring elements like

• Client Contribution (CC) – This indicates how much an MSP earns from each client excluding the cost of obtaining the client
• Client Effective Rate (CER) – This indicates how much an MSP earns from each client based on the time spent servicing them.

CER = Monthly fixed fees/Hours spent with the client

(Learn more about ensuring the profitability of your managed services contract here.)

Diligent tracking of the above metrics is required to grow your business, to remain profitable and to mitigate any financial damage that arises. To learn more about increasing the profitability of your business, download our eBook MSP Guide to Higher Growth: Pricing for Profitability.

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MSP consultancy Taylor Business Group (TBG) is focused on helping clients drive profit, and it has 10 metrics it says are the most important metrics to keep MSPs on track to achieve their goals. We took TBG’s 10 and added a dozen more metrics of our own.

It’s important to note that the first step to take before you start implementing any new metrics, is to ask what kind of company you own or work for. There are MSPs that are “lifestyle businesses.”  The owner knows and loves technology, enjoys working with a small close group of clients, makes a good living, and is perfectly happy running the business this way. In this case, the intense discipline of tight metric tracking may not be critical to this business’ success.

Metrics are made for growth-oriented businesses, argues TBG’s John Christophersen. These businesses are entrepreneurial, have a vision, believe in a high-horsepower sales engine, invest profits back into company development, and manage by numbers and metrics.

With that caveat out of the way, let’s look at the metrics, starting with A and ending in T.

1. Administrative Expense

Administration is critical, but doesn’t directly build the business the way sales and technical development can. As a result, these expenses should be controlled – and be less than 20% of revenue.

These expenses include administrative salaries, benefits, related taxes, internal IT costs, and building and office expenses.  While TBG doesn’t point this out directly, administrative expenses also include all IT systems which support the business, such as billing, CRM, finance, project management, etc.

On a related front, TBG stresses that MSPs should “eliminate or minimize all non-strategic costs!” And yes, the exclamation point came from TBG.

2. Agreement Profitability

This measures how much an MSP makes per client agreement.

3. Average Response Time

This key metric tracks how fast your techs respond to a problem.

4. Billing Resource Utilization

This is a bit like how partners in a law firm are judged – by billable hours. By measuring the ratio of billable- to wasted-hours, you can see how efficiently your staff is deployed. And by calculating their hourly rate, you can see how much money is lost when they are not working on billable jobs.

5. Client Contribution (CC)

This refers to how much an MSP earns from each client, less the cost of obtaining this revenue. The client revenue includes sales of products, fixed fees and services. The related costs include what the MSP spends to acquire the revenue (such as marketing and sales costs) and the labor costs of providing them.

6. Client Effective Rate (CER)

This metric measures how much you make from each client based on time spent servicing them. It is the monthly fixed fees you charge divided by how many hours you spent with that client. This will produce a revenue-per-hour result.

7. EBITDA

‘Earnings before Interest, Taxes, Depreciation and Amortization’ is a key measure if you are looking to sell your MSP operation. If your other vitals, such as Monthly Recurring Revenue (MRR), are good, you can, in some cases, expect a 10x multiple of your EBITDA when you sell your company.

8. First-Time Fix Percentage

This calculation measures the percentage of client problems that are resolved with only one contact to your help desk.  It can help you track the efficiency and training levels of your support technicians.

9. Product Margin

Product margin is, to quote Investopedia, “the difference between the cost of the good or service and the retail price; the greater the difference, the higher the margin.”

TBG also uses this basic definition, with ‘product sales revenue’ substituting for the ‘retail price.’

According to TBG, the number to shoot for is over 17.5% margin, with over 20% being preferred. Beyond that, TBG believes that the margin should be at least based in part on product, with some products needing a higher targeted margin than others.

However, calculating the true cost of goods sold can be the trickier for a services provider than a manufacturer. Include direct labor, any service delivery charges (such as transportation costs if there is any travel involved) and sales commissions. Don’t include overhead or operating expenses such as rent, utilities, or salaried positions not directly tied to delivering the service.

10. Hourly Service Rates

This metric is pretty self-explanatory. To use this as a measurement, the MSP should have a service organization structure, with clearly defined service organization structure. This involves clear job descriptions, well-thought-out career planning strategies, and “pre-defined compensation plans.”  Clarity on rates for different staff levels makes calculating this metric easier.

Meanwhile, your services rates should be what you charge before volume or other discounts are applied. That said, the hourly rate an MSP gets should be 4.5 times the “hourly burdened salary rate,” which includes taxes, supplies, insurance and other related worker costs.

11. Monthly Recurring Revenue (MRR)

This is a key measure for MSPs that refers to the most critical revenue stream — revenue you can count on each and every month. Healthy MSPs make the majority of their money this way.

12. Net Operating Income

TBG is a huge fan of Net Operating Income, which is a metric that pretty much sums up the current health of an MSP business.

Operating income is similar to EBITDA, except that EBITDA also considers amortization and depreciation. Net operating income is more commonly used because it is a bit easier to calculate than EBITDA.

According to TBG, your net operating income should be a least 10%. At the same time, TBG likesfor services to be more than 60% of total income. And when it comes to service revenue, Monthly Recurring Revenue (MRR) should be more than 60% of the total.

13. Outstanding Issues

How many issues are still unresolved on a weekly, monthly and quarterly basis? If the number is too high, you need better processes, more automation, or more employees.  In fact, keeping track of outstanding issues is one of the recommended ways to identify processes ripe for automation.

14. Revenue/Compensation (RpC)

This is a simple measure of employee productivity. Essentially, you divide the revenue from each employee by how much they make. Of course, not all employees are equally involved in driving revenue, but it can be a good measure of which employees are moving the company forward.

15. Sales Compensation

You should invest in sales and compensate properly, including offering a base salary, commission, and bonuses. At the same time, you shouldn’t spend more than a third of your gross profits on sales.

16. Sales Expense

Building on the topic of sales spending, TBG believes that no more than 10% of your total revenue should be spent on sales. That expense should be fully loaded with salary, commission, and bonuses. It should also include sales training expenses, advertising and marketing spending, and miscellaneous sales expenses.

17. Service Department Profitability

In general, you don’t want to spend more than 55% of your gross profits on service. Similar to Product Margin, you calculate this by adding up all your services revenues and subtracting the cost of goods sold – or cost of services sold.  Calculate the salary expense that is directly related to delivering services, training or travel expenses, sales commissions, and any transaction fees associated with annuity revenues. Again, overhead costs such as rent and utilities, and any salaried expenses not directly related to delivering services is not including in the cost of goods sold.

So, an MSP that received $1.2 million in services revenue and had $540K in expenses tied to delivering these services would reach a minimum of 55% gross profit on services.

MSPs must keep a close eye on pricing and expenses to make their goal.

18. Service Level Agreement (SLA) response times

This refers to how fast an MSP responds to service level performance issues.  Not actively managing this metric could result in an SLA penalty for the MSP. Even if you don’t support guaranteed SLAs, understanding response times is the first step toward improving processes and service delivery

19. Service Salaries

Service roles and titles can include help desk, NOC technicians and engineers, service managers, overall engineers and technicians, and service coordinators. The salaries of these staffers should be no more than a third of overall service revenues.

To make service efficient, TBG recommends clearly defining the structure of the service organization. This involves clear job descriptions, well-thought-out career planning strategies, and “pre-defined compensation plans.” The company also recommends hiring entry-level workers, and then promoting from within. By doing this, you can train new employees to your specific work processes (and not have to retrain technicians used to doing processes another way).  But, more importantly, by providing a career path – and actively promoting from within – you increase morale and employee retention rates.

20. Service Utilization

First, let’s define service utilization. According to TBG, it is the “percentage of service inventory time that is billable per technician.”

In this case, the MSP judges staff efficiency by calculating the ratio of billable- to wasted-hours. If you add in your tech’s hourly rate, you’ll discover how much money is lost when techs are not working on billable jobs.

21. SLA Compliance

This metric rates how well you satisfy your client SLAs and what (if any) penalties you incurred as a result of not meeting these SLAs.  Tracking this metric can provide insight into how well you are setting SLAs versus your business’ ability to meet them; whether some individual clients or services are more challenging in terms of meeting SLAs; or whether penalties incurred would be capital better invested in better systems, solutions and training programs.

22. Tickets Opened vs. Tickets Closed

This measures how efficient your organization is at resolving problems, and can also highlight areas where your team’s technical skills need improvement.

Looking to reduce your administrative expenses and increase efficiency?

Looking to reduce your administrative expenses and increase efficiency?  Request a demo of Kaseya BMS – a next-generation business management solution that was built specifically to help MSPs spend more time selling and delivering services, and less time on non-revenue-generating tasks like billing and project management.

The post 22 Critical Metrics and KPIs for MSPs appeared first on Kaseya.

MSP consultancy Taylor Business Group (TBG) is focused on helping clients drive profit, and it has 10 metrics it says are the most important metrics to keep MSPs on track to achieve their goals.

It’s important to note that the first step to take before you start implementing any new metrics, is to ask what kind of company you own or work for. There are MSPs that are “lifestyle businesses.”  The owner knows and loves technology, enjoys working with a small close group of clients, makes a good living, and is perfectly happy running the business this way. In this case, the intense discipline of tight metric tracking may not be critical to this business’ success.

Metrics are made for growth-oriented businesses, argues TBG’s John Christophersen. These businesses are entrepreneurial, have a vision, believe in a high-horsepower sales engine, invest profits back into company development, and manage by numbers and metrics.

With that caveat out of the way, let’s look at the metrics, starting at number 10 and moving all the way up to number one.

10. Product Margin

Product margin is, to quote Investopedia, “the difference between the cost of the good or service and the retail price; the greater the difference, the higher the margin.”

TBG also uses this basic definition, with ‘product sales revenue’ substituting for the ‘retail price.’

According to TBG, the number to shoot for is over 17.5% margin, with over 20% being preferred. Beyond that, TBG believes that the margin should be at least based in part on the product, with some products needing a higher targeted margin than others.

However, calculating the true cost of goods sold can be the trickier for a services provider than a manufacturer. Include direct labor, any service delivery charges (such as transportation costs if there is any travel involved) and sales commissions. Don’t include overhead or operating expenses such as rent, utilities, or salaried positions not directly tied to delivering the service.

9. Hourly Service Rates

This metric is pretty self-explanatory. To use this as a measurement, the MSP should have a service organization structure, with clearly defined service organization structure. This involves clear job descriptions, well-thought-out career planning strategies, and ‘pre-defined compensation plans’  Clarity on rates for different staff levels makes calculating this metric easier.

Meanwhile, your service rates should be what you charge before volume or other discounts are applied.

That said, the hourly rate an MSP gets should be 4.5 times the “hourly burdened salary rate,” which includes taxes, supplies, insurance and other related worker costs.

8. Sales Compensation

You should invest in sales and compensate properly, including offering a base salary, commission and bonuses. At the same time, you shouldn’t spend more than a third of your gross profits on sales.

7. Sales Expense

Building on the topic of sales spending, TBG believes that no more than 10% of your total revenue should be spent on sales. That expense should be fully loaded with salary, commission, and bonuses. It should also include sales training expenses, advertising and marketing spending, and miscellaneous sales expenses.

6. Administrative Expense

Administration is critical, but doesn’t directly build the business the way sales and technical development can. As a result, these expenses should be controlled – and be less than 20% of revenue.

These expenses include administrative salaries, benefits, related taxes, internal IT costs, and building and office expenses. While TBG doesn’t point this out directly, administrative expenses also include all IT systems which support the business, such as billing, CRM, finance, project management, etc.

On a related front, TBG stresses that MSPs should “eliminate or minimize all non-strategic costs!” And yes, the exclamation point came from TBG.

5. Service Utilization

First, let’s define service utilization. According to TBG, it is the “percentage of service inventory time that is billable per technician.”

This notion is similar to another metric we described in a recent blog “The Encyclopedia of MSP Measurement”. In this blog, we described Billing Resource Utilization which also focuses on billable hours. In this case, the MSP judges staff efficiency by calculating the ratio of billable- to wasted-hours. If you add in your tech’s hourly rate, you’ll discover how much money is lost when techs are not working on billable jobs.

4. Managed Service Agreement Profitability

This metric has some similar measurements, including:

Client Contribution (CC): How much an MSP earns from each client, less the cost of obtaining this revenue.

Client Effective Rate (CER): How much an MSP makes from each client based on time spent servicing them. It is the monthly fixed fees that are charged divided by how many hours spent with that client. This will produce a revenue-per-hour result.

TBG suggests the use of Managed Services Agreement Profitability. They believe there should be at least a 65% gross margin on each agreement. If you make less than that, you are pricing your services too low, your service staff is deficient, or your procedures and processes are not optimum.

3. Service Salaries

Service roles and titles can include help desk, NOC technicians and engineers, service managers, overall engineers and technicians, and service coordinators. The salaries of these staffers should be no more than a third of overall service revenues.

To make service efficient, TBG recommends clearly defining the structure of the service organization. This involves clear job descriptions, well-thought-out career planning strategies, and “pre-defined compensation plans.” The company also recommends hiring entry-level workers and then promoting from within. By doing this, you can train new employees to your specific work processes (and not have to retrain technicians used to doing processes another way).  But, more importantly, by providing a career path – and actively promoting from within – you increase morale and employee retention rates.

2. Service Department Profitability

In general, you don’t want to spend more than 55% of your gross profits on service. Similar to Product Margin, you calculate this by adding up all your services revenues and subtracting the cost of goods sold – or cost of services sold.  Calculate the salary expense that is directly related to delivering services, training or travel expenses, sales commissions, and any transaction fees associated with annuity revenues.  Again, overhead costs such as rent and utilities, and any salaried expenses not directly related to delivering services is not including in the cost of goods sold.

So, an MSP that received $1.2 million in services revenue and had $540K in expenses tied to delivering these services would reach a minimum of 55% gross profit on services.

MSPs must keep a close eye on pricing and expenses to make their goal.

The No. 1 Metric is Net Operating Income

TBG is a huge fan of Net Operating Income, which is a metric that pretty much sums up the current health of an MSP business.

Operating income is similar to EBITDA, except that EBITDA also considers amortization and depreciation. Net operating income is more commonly used because it is a bit easier to calculate than EBITDA.

According to TBG, your net operating income should be a least 10%. At the same time, TBG likes for services to be more than 60% of total income. And when it comes to service revenue, Monthly Recurring Revenue (MRR) should be more than 60% of the total.

What to Learn More?

Check out TBG’s on-demand version of their Ten Most Important Numbers talk for more details.

Looking to reduce your administrative expenses and increase efficiency? Request for a demo of Kaseya BMS – a next-generation business management solution that was built specifically to help MSPs spend more time selling and delivering services, and less time on non-revenue-generating tasks like billing and project management.

The post The 10 Most Important MSP Business Metrics – How Do You Measure Up? appeared first on Kaseya.